![featured](https://macrohive.com/wp-content/uploads/2023/11/Depositphotos_125555932_S.jpg)
Europe | Monetary Policy & Inflation
Europe | Monetary Policy & Inflation
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
The ECB will decide policy this week. We expect no changes and no forward guidance – so perhaps an uneventful meeting. September could be more interesting.
The ECB’s current line is that they are data-dependent and can look through the recent ‘bumps’ in the disinflationary path (particularly services strength; Chart 1). This is a credible strategy while the ECB’s forecast trajectory holds (Chart 2).
Comments may suggest every meeting is live. This could be modestly dovish, although for now we consider market pricing of around two more cuts this year as reasonable.
Policymaker comments appear to show little dissent on pausing for now and watching the data. Most look for either one or two more cuts this year.
Wednesday brings the final June inflation print. No change is expected in the headline and core readings (versus the preliminary estimates), but the national results suggest wage-intensive services inflation momentum could rise again (Chart 3).
While this may seem hawkish, it is unlikely to draw strong comments within the presser. We expect momentum in services to fade over summer on seasonal factors, which the ECB is also likely to look through too.
Spring sale - Prime Membership only £3 for 3 months! Get trade ideas and macro insights now
Your subscription has been successfully canceled.
Discount Applied - Your subscription has now updated with Coupon and from next payment Discount will be applied.